2008 Hallene Lecture

The High Cost of Doing Business Right


By Melissa Silverberg

Jeffrey W. Jackson, senior vice president and general counsel for State Farm Mutual Automobile Insurance Company spoke of his business experiences while at State Farm and gave his advice to College of Business attendees on Oct. 16, 2008.

The lecture, titled “How to Survive in Business,” was the 7th Alan M. Hallene Lecture and a part of the Hoeft Technology & Management Program’s Visiting Executive/Scholar Series. The speech was held at the Alice Campbell Alumni Center and followed by refreshments in the Richmond Gallery.

Jackson spoke about issues surrounding State Farm’s role in the cleanup of the Gulf Coast in the months following the destruction left by Hurricane Katrina in 2005. In one unusual case, State Farm was sued by a policyholder that was unhappy with how the company handled his claim. Government officials and a couple of independent adjusters engaged in questionable practices to exact a large settlement from State Farm. Ultimately, State Farm chose to fight what they believed to be unjust treatment, and though they were ultimately vindicated, it cost them immense legal fees for their defense.

“The story that State Farm had to tell was one that we felt was important to be heard by a broad audience,” said Gretchen Winter, executive director of the University’s Center for Professional Responsibility in Business and Society and a co-sponsor of the lecture. “Organizations like State Farm that have attempted to act in a professionally responsible manner, often find themselves in positions where the end of the story does not receive the same widespread media coverage that the often inaccurate allegations do,” Winter said. “So the Hallene lecture in many ways presented the end of the story. State Farm was actually shown to have behaved legally, appropriately and in accordance with their professional responsibilities.”

An important part of Jackson’s speech was the fact that his perspective was a side of the issue not often seen in the business world, said Don Davis, visiting lecturer of finance, who attended the speech with many of his students.

“It is good to hear someone from his level of strategic control in a company,” Davis said.

Davis added that most of his students who attended the speech walked away with the understanding that the company’s hands were tied throughout this difficult situation.

Lisa Mazzocco, student in Materials Science and Engineering and a member of the Hoeft Techonology & Management Program, said that one of the most important parts of the lecture was the idea that honesty and integrity can win out in the end of such a difficult situation.

“As a student interested in law and politics, it showed me the grimy side of the business,” Mazzocco said. “But having integrity is paramount.”

Other students agreed that while State Farm was in a difficult situation and though they wound up losing a lot of money, they did the right thing in taking professional responsibility for their actions.

“I think he did a very good job of portraying the situation State Farm faced as well as the actions that were taken,” said Brian Arvid Schmidt, senior in Aerospace Engineering and also a member of the Hoeft Technology & Management Program. “That is both by State Farm and its adversaries, throughout the course of the predicament that faced State Farm.”

Schmidt said the lecture taught him that he could really trust an insurance company as large as State Farm and the employees that work for it to put customers first at the end of the day.

“He showed us that, even though others were “playing dirty,” State Farm was able to complete its business professionally and abide by the law,” Schmidt said.

This idea of professional responsibility is important for students to learn for several reasons both in college and as they progress into the business world.

“Students need to learn and understand about professional responsibility because once they are out in the business world, they will find themselves in situations where they must exercise sound judgment in complex situations that lend themselves to more than one answer sometimes,” Winter said. “That’s why what we hope to do with the work of the center is give students some exposure to those types of scenarios, some skills in the analytical process and some real practice in articulating the factors necessary to come to a final decision.”